Singapore-ARA LNG spread flips to $70/mt discount

European bunker premiums widen

South Asian buying supports JKM prices

Weekly changes in LNG bunker prices:

• ARA up by $178/mt to $1,607/mt
• Singapore up by $48/mt to $1,537/mt
• Baltics up by $179/mt to $1,713/mt

ARA

Rotterdam's LNG bunker price has surged, tracking a sharp rise in the front-month Dutch TTF natural gas contract.

Over the past week, TTF has climbed 13% to $28.50/MMBtu ($1,482/mt). The latest rally has been fuelled by escalating US-Iran tensions and mounting concerns over energy shipments through the Strait of Hormuz.

Supply risk concerns have grown after reported exchanges between the US and Iran, Houthi strikes on Saudi energy facilities and attacks on Russia's fuel and energy infrastructure, the Japan Organization for Metals and Energy Security (JOGMEC) said.

“On the supply side, the single most important uncertainty remains the duration of the Hormuz closure,” said International Energy Agency (IEA) gas analyst Greg Molnár.

“Concerns were heightened after reports that a drone attack had damaged Russia’s Yamal LNG facilities, a major hub for the country’s gas industry. While Russian pipeline flows to Europe have collapsed since its invasion of Ukraine in 2022, Yamal LNG still covers about 5% of Europe’s gas needs,” commented ANZ Bank’s senior commodity strategist Daniel Hynes.

TTF prices have also been supported by a series of supply disruptions, including unplanned maintenance at Norway’s Asgard and Troll gas fields and the Kollsnes processing plant, as well as the shutdown of the Interconnector UK (IUK) pipeline linking the UK and Belgium, JOGMEC said.

"...maintenance in Norway and reduced Algerian flows to Italy are making progress even more challenging," ANZ Bank's Hynes said.

Slower gas storage injections across Europe and lower wind power generation have provided further support to gas prices, JOGMEC said.

EU underground gas storage facilities were 68% full on 13 September, up from 67% a week ago. Stored volumes were 16% lower than a year earlier, when facilities were 80% full, according to Gas Infrastructure Europe.

Europe's storage position remains well below the five-year average, raising concerns over gas availability later in the winter, Mind Energy said.

The ARA's LNG bunker price has drawn additional support from a 6% rise in the bunker delivery premium, which has gone from $2.27/MMBtu ($118/mt) to $2.41/MMBtu ($125/mt).

Baltic bunker premiums have widened from $4.28/MMBtu ($223/mt) to $4.44/MMBtu ($231/mt).

Singapore

Singapore's LNG bunker price has risen by far less than the ARA's. Its $60/mt premium over the ARA a week ago has flipped to a $70/mt discount.

Singapore’s LNG bunker prices typically track the front-month NYMEX Japan/Korea Marker (JKM), which has risen by $0.80/MMBtu ($42/mt) to $24.89/MMBtu ($1,294/mt).

The Singapore bunker delivery premium has also edged higher to $4.66/MMBtu ($242/mt), from $4.54/MMBtu ($236/mt).

JKM prices gained amid higher geopolitical risk premiums following escalating tensions in the Middle East, while concerns over supply availability intensified as the arbitrage window for US LNG cargoes into Asia remained closed, JOGMEC said.

Escalating conflict in the Middle East has raised concerns across Asian gas markets, ANZ Bank's Hynes said.

Strong spot LNG procurement by South Asian buyers provided an additional boost to JKM prices, JOGMEC said.

“Importers are continuing to seek cargoes, with no resolution of the conflict in sight,” Hynes added.

Competition between Asian and European buyers for limited spot LNG cargoes is also intensifying, the IEA's Molnár said.

In other LNG bunker news, ferry operator Baleària’s vessel was bunkered with 600 MWh (39 mt) of LNG in a multi-truck-to-ship operation at Spain’s Port of Santa Cruz de Tenerife.

The global LNG bunker vessel fleet will need to expand to 165-208 vessels by 2030, from around 70 currently in operation, according to a new white paper from DNV.

Japanese gas supplier Osaka Gas has completed its first ship-to-ship (STS) LNG bunkering operation in Osaka Bay, using the LNG bunkering vessel Seto Azure.

Meanwhile, Polish refiner Orlen has partnered with the Port of Gdynia Authority to assess the potential for LNG and bio-LNG bunkering at the Polish port.

By Tuhin Roy

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